Bright future: Eight holding company chiefs on the future of PR

As disciplines continue to converge, integrated offerings by PR firms are the driving force behind corporate strategies, say the CEOs of the industry's largest holding companies.

Yannick Bolloré, chairman and CEO, Havas

How was 2014 for the PR agencies in your holding company?
The agency is well placed to benefit from the growing demand for PR thanks to its high profile from awards plus innovative approaches. Some of our honors globally include PRWeek’s first Global Agency Professional of the Year for [Havas PR North America CEO] Marian Salzman.

For many agencies, being part of Havas PR has given them welcome access to resources of a quality or nature they didn’t have locally. Foremost among these are information and intelligence assets, either created in the center or shared among offices.

Under our Havas PR Climate Change umbrella, we were able to put all this into practice for our global assignment with the United Nations Foundation. We lived "local is the new global" and vice versa, with the New York team pulling together Havas PR UK, Maitland, our parent agency Havas Paris Worldwide, and Red Agency to form the ultimate networked team of climate champions.

In terms of expansion, we added Formula in the US and affiliates in APAC. However, a survey of global agency heads suggested agencies outside the big high-profile markets need more attention and inclusion, indicating that BRIC and APAC need more focus and development. And agency leads need more global new-business wins to help create a more collaborative collective.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
With access to some of the smartest planning and creative brains, we don’t just generate headlines. We develop ideas that are socially contagious. We aren’t just pushing out the message or amplifying advertising. That’s the old PR.

A hallmark of the new Havas PR is that we are part of a global team that responds and reacts and shapes its proposition to fast-changing external environments and dynamics. We aren’t bound by the rigid structures of a traditional network.

Feeding into our news-crafting expertise is our other specialty as dedicated trend spotters. We’re always keeping our eye on what’s next and playing to the strength of passionate populations. As a result, we often see a now-and-next thread we can weave through the stories we tell for our clients.

What’s in store for PR over the next 12 months? 
The buzzword in the industry now is growth and the outlook quite optimistic. The PR industry has been through deep disruption over the last five years and it will have to face further changes over the next five. It has to reinvent itself constantly and this will open many new doors for us.

Maurice Lévy, CEO, Publicis Groupe

How was 2014 for the PR agencies in your holding company?
In 2014 the management of MSLGroup focused on the transformation of our PR agencies and reorganized the management of regions or markets, North America for instance, to accelerate the pace of change. Last year, the revenue performance of MSLGroup was not as good as we had planned for the global network, but the operating margin was good.

And the implementation of transformative measures is starting to pay: MSLGroup grew as expected in Q1 of this year. There is definitely a new momentum at work thanks to much stronger global practices, more efficient client migration across regions, and the acceleration of the adoption of digital and social tools around the world.

MSLGroup is a leader in PR, strategic communication, and engagement strategies in China, in India, and most of Europe.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
As boundaries of various disciplines blur, as consumer empowerment increases day by day, and as we feel the impact of greater convergence, Publicis Groupe is definitely focusing on becoming the preferred partner of its global and local clients.

Publicis Groupe’s clients are facing huge challenges as disintermediation, a consequence of digitalization, is impacting many businesses and sectors. Our aim is to help them transform their business and be ready for the empowerment and convergence era of marketing, communication, e-commerce and, more and more, m-commerce.

Integration of skills and know-how is of the essence: MSLGroup has developed very specific skills in the last five years and we intend to leverage them within our other disciplines and make sure they contribute to the overall transformation of Publicis Groupe.

What's in store for PR over the next 12 months?
The future is about breaking down silos. It is about influence, great content, and ideas, and interactive processes between consumers and brands, or people and governments. Within MSLGroup we have consultants that are masters in these areas and are used to interacting with many different stakeholders: Journalists, lawmakers, influencers, investors, and consumers.

PR agencies have cultivated the art of influence, the art of debate, of crafting strong points of view. That is why we are very confident in the future role of MSLGroup within our evolving structure.

John Wren, CEO, Omnicom Group

How was 2014 for the PR agencies in your holding company?
Last year was one of excellent growth for Omnicom and one I believe reaffirms the strength of our business and the talent of our people. Our people remained laser-focused on clients and the business, and the results speak for themselves.

Our PR revenue increased 8.5% organically in the fourth quarter of 2014, vs. Q4 2013. For the full year, our PR agencies generated 4.1% organic growth. We saw important contributions coming from our full-service, global PR agencies, as well as our specialized PR brands.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
I’m pleased to see our agencies’ real-time and content service offerings evolving rapidly; both are natural areas for PR to excel.

Within our agencies, organizational structures are changing, allowing us to plan and execute smarter and faster on behalf of our clients. However, there are no grand structural changes taking place at the holding company level.

Omnicom thrives on its entrepreneurial culture, our unrivaled and unique collaborative spirit and, notably, on creativity. When our agencies combine their distinct strengths and areas of expertise to solve client problems, great things happen for our clients and our businesses.

Our agencies are working in a deeply connected and fluid fashion around our clients’ needs, and PR is a key part of the marketing mix. We see it in real-time marketing and content generation, and this goes for corporate reputation work as well. PR’s role naturally elevates as it often helps a brand find that all-important authentic voice.

PR has become such an important part of the overall integrated offering. This is the case with many of Omnicom’s largest clients. This will only continue.

What's in store for PR over the next 12 months?
More change and, with that, expanded growth opportunities for our clients, agencies, and people. Given our agencies’ strengths in social, digital, content generation, real-time marketing and reputation work – and now the application of Omnicom’s best-in-class data & analytics offerings – we are confident about our prospects in PR.

We have the best PR brands in the industry today; they will continue to make important contributions to our clients and Omnicom. We will continue to invest in those brands through recruitment and development of great talent, strategic acquisitions, and the introduction of innovative new products and services. This will ensure we remain ahead in this remarkable period of change.

Martin Sorrell, founder and CEO, WPP

How was 2014 for the PR agencies in your holding company?
Our public relations and public affairs business returned to top-line growth in 2014, with revenues up 2.6% in constant currencies. The fourth quarter was particularly encouraging, up 5.1% like for like, with strong growth in the US, UK, and Asia Pacific. It’s a good business.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
When people talk about convergence they’re really talking about digital technology. We lead the industry in the application of data and tech to marketing services, whether through our wholly owned businesses like Xaxis, AKQA, and Data Alliance or investments in innovative ad tech and data firms like AppNexus, Rentrak, and comScore.

It’s driving greater collaboration between different parts of our business. Our media investment management and data investment management operations are working much more closely together, April’s data partnership with Facebook being a prime example.

Content is hugely important. In 2014 we invested in next-generation digital content studio Indigenous Media, and in January this year we led a $250 million investment round in George Pyne’s Bruin Sports Capital. These investments join others such as Media Rights Capital, Vice, and Fullscreen.

In addition, we have GroupM Entertainment, which has invested more than $300m to date in over 300 content partnerships.

For PR, it means an opportunity to place itself at the center of things: Data, social, and content present great opportunities for PR and PA. Blue State Digital, for example, uses data and technology to build and mobilize communities on behalf of some of the world’s leading brands, nonprofits, and advocacy groups – and, of course, to help win elections.

Group SJR, which was acquired by Hill+Knowlton Strategies in 2013, specializes in middleweight content (short-form, visual, and shareable) and finding new ways to connect, whether it’s taking consumers on sales journeys or educating stakeholders. Fast Company called it "the biggest publishing company you’ve never heard of."

What's in store for PR over the next 12 months?
The marketing services business is being driven by two key factors, geography and technology, and this applies to PR as much as any other discipline. In a data-, technology-, and integration-driven world, PR has the opportunity to cast off some of its self-doubt and really build its influence.

Social media, content-led campaigning, and reputation – these are all areas in which communications should be taking the lead. At the same time, economies such as China and India grow inexorably in importance. Like everyone else, PRs need to look well beyond the US and UK for inspiration.

Another key trend is the growing importance of governments – as regulators, investors, and clients – which means growth opportunities for public affairs too.

Michael Roth, chairman and CEO, Interpublic Group

How was 2014 for the PR agencies in your holding company?
We saw continued strong performance from IPG’s PR firms in 2014, with revenue up nearly 10% for the year. Weber Shandwick led the way, receiving the prestigious honor from PRWeek as Agency of the Year.

The company’s evolution into a digital and strategic leader across all disciplines has been remarkable. Golin and DeVries are following suit, and we’re seeing all of the PR firms within IPG winning market share and the highest levels of industry recognition.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
PR has never been held in higher regard, because it has succeeded in aligning itself with broader developments in marketing communications that are driving corporate strategies.

For example, social and digital is now essential in this industry, which is something we anticipated when we worked to embed those capabilities into our PR businesses. We’ve invested in building out a range of disciplines within our PR firms, such as Mediaco, our content creation and distribution unit, as well as Sawmill, a full-service agency, both within CMG.

Collaboration across the IPG network is what clients are increasingly asking for, and it’s fundamental to how we operate as a holding company. Our focus on delivering open architecture solutions that integrate the best of our talent across the organization by means of customized client teams was a major contributor to our success in 2014 and will continue to be going forward.

Our PR agencies’ ability to effectively connect with a broad range of marketing partners has made them a key element of this operating model.

What's in store for PR over the next 12 months?
PR agencies are going to continue to develop more specialized offerings for their clients, which has important implications for the type of talent we’re recruiting. As a high-value partner to the C-suite, PR will need to further develop its branding and strategic capabilities, as well as its bench strength in subject matter experts to deliver against a range of industry verticals.

Within the next 12 months, we are going to see a continued increase in the integration of digital, social, and content. What people are calling a "digital disruption" in the industry has clearly been a business opportunity for our PR agencies and we will continue to build and capitalize on this important trend.

Miles Nadal, CEO, MDC Partners

How was 2014 for the PR agencies in your holding company?
We had an exceptional year: PR revenue grew almost 20% organically, better than the 12.2% at our Strategic Marketing Services unit [which houses MDC’s PR firms].

The more we acquire the more amortization of intangibles we have. If we find more opportunities and that defers accounting profitability, that doesn’t matter to us.

Our EBITDA is almost 15% and growing. Our cash distributions are at an all-time record and continue to grow. We define profitability as free cash flow, cash available to distribute dividends or stock buybacks or acquisitions.

What matters to us is return on invested capital, which is about 40%. Over the last [few] years, our share price appreciated more than any firm in our industry. A shareholder who invested in 1987 would have made 20 times their money, including dividend reinvestment.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
When we started some of the greatest transformations in marketing communications were happening in PR. There were huge changes affecting social media, experiential, crisis management, and financial communications.

What has happened to PR was like advertising 15 years ago. Clients got savvy and wanted to know what’s going to help them sell more products to more people more often. We’re not in the services business – we solve client problems and help them grow in a very competitive environment.

We are challenging conventional wisdom and doing things differently. The beauty of the MDC model is that when people have equity they’re inherently owners not employees.

You don’t have to tell owners like Aaron Kwittken, Elliot Sloane, or Scott Allison to grow business more quickly or increase margin, because they have a direct economic interest in the success of the business. People are empowered to make the right decisions, which can include not necessarily growing this quarter or this year.

What's in store for PR over the next 12 months?
There are wonderful PR firms out there and if we can find others like the 10 we’ve got, we will expand. It would be surprising if we didn’t find at least one more, but if there are more to be had we could do two, three, or four over the next couple of years.

There will be a culling of the herd, clients will reduce their network of agency partners to those delivering most impact, and that will continue. It’s a survival-of-the-fittest environment where the most critical thing is talent. The environment that recruits and retains the very best talent will do the best work.

We love being the independent entrepreneurial insurgent; we will continue to build this business ambitiously and aggressively. We’ve never seen a better opportunity for us to grow.

Tim Dyson, CEO, Next Fifteen Communications Group

How was 2014 for the PR agencies in your holding company?
It was a record year, with revenues up 10.6% overall, and profitability up 51.6%. It was a very good period and the same trends are extending into 2015.

We saw strong growth across North America and the UK, more modest in Asia and Europe, mainly as a function of the overall economy.

The US drove growth for a long time because of its scale and modern nature, but other markets are starting to buy products in the same way, so other parts of the group are now contributing.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
We’re focused on content, insight, and the technology that delivers content and insight.

Brands becoming publishers is a well-worn track – everyone understands that. We’re increasingly being drawn into brand narrative and how brands can best articulate it across different content, not just written word.

Visual storytelling is the fastest-growing part of our business – and not just YouTube videos and infographics. Brands are thinking about visual narrative, creating a story arc, and constructing a brand strategy in very different ways.

Part of it is content strategy; part is content creation and delivery. We can’t move fast enough in that regard – the demand is huge. It’s a battle between PR and advertising as to who can own that visual narrative.

What's in store for PR over the next 12 months?
I’m not obsessing about the size of my agencies: I’m obsessing about making them as modern as possible.

If that means they stay small I’m fine with that. I’d rather they were modern with a great product working with great companies than big and flabby and essentially bland.

Size is how marketing services used to be. Scale doesn’t matter anymore; after a while it loses its value. Our success at building global relationships is more a function of how our clients are organized.

WPP has money and resources to throw at this way beyond anything we’ll ever have, yet they haven’t succeeded. If their mission was to sign up 100 massive global clients, they’ve failed.

But I don’t think Martin Sorrell cares, he just wants the biggest pieces of marketing spend he can get his fingers on. He’s a pragmatist. Follow the money; not any whim about global.

We’ll make acquisitions in the next year in content, insight, or technology. Tech is becoming part of the marketing budget in the same it was historically broken into PR, advertising, and events.

Content and insight is table stakes. The long-term interest will come out of investing in technology. That’s a challenge, because we’re a marketing services group, but if we want to play long term we have to do it.

Paul Taaffe, CEO, Huntsworth

How was 2014 for the PR agencies in your holding company?
Revenue in 2014 was flat overall, with small declines at Red and Citigate. Grayling is still turning itself around; Huntsworth Health has accelerated and is achieving rapid growth.

Huntsworth has a lot of revenue in Europe and that was a drag on performance from a currency and trading perspective. We’re still coalescing as a group.

How is the convergence of disciplines and increasing focus on content impacting, 1) The overall structure of your holding company? 2) The role of PR within it?
The move toward content is affecting some of our agencies but not others. Grayling just won a $6.5 million tender in Kenya and a large part of that is about content, but it’s less relevant for financial companies. The broad-based digitization of communications is helping growth at our health firms.

What's in store for PR over the next 12 months?
There’s an opportunity for Huntsworth to stand for something and mean more to clients in their segments. Clients are tired of hearing that one agency can do everything for them and are looking for more focused and expert specialist suppliers.

[Former CEO] Lord Chadlington chairs our client advisory group and continues to be active doing what he does best: Building great relationships and providing senior counsel.

We have no acquisitions planned at the moment.

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